It has already become obvious that one of the issues in the 2012 elections will be the evil rich who keep getting richer. Just in case you were wondering, I am not in any danger of entering that class. Anyway, we recently heard that as the rest of us are eating out less often and keeping our cars longer, the evil rich are prospering at a fantastic rate. Well, not so fast.
An article slated for tomorrow’s Wall Street Journal takes apart the numbers and reveals what has really happened to the rich under the Obama administration.
The article reports:
A recent report from the Congressional Budget Office (CB0) says, “The share of income received by the top 1% grew from about 8% in 1979 to over 17% in 2007.”
I’m not positive, but I suspect either Barack Obama or Joe Biden has referenced those numbers in recent days. If not, I am sure you can find them in sound bites from other Democrat leaders. Do you wonder why the numbers stop at 2007? There is a reason.
The article further reports:
The CBO didn’t say, although its report briefly acknowledged—in a footnote—that “high income taxpayers had especially large declines in adjusted gross income between 2007 and 2009.”
No kidding. Once these two years are brought into the picture, the share of after-tax income of the top 1% by my estimate fell to 11.3% in 2009 from the 17.3% that the CBO reported for 2007.
The article explains the different types of income the rich receive and how they are taxed. It also explains the impact of changing tax rates in various areas. Please read the entire article to understand how the Obama administration is twisting the facts in order to stir up class warfare.
The article concludes:
If Congress raises top individual tax rates much above the corporate rate, many billions in business income would rapidly vanish from the individual tax returns the CBO uses to measure the income of the top 1%. Small businesses and professionals would revert to reporting most income on corporate tax returns as they did in 1979.
If Congress raises top tax rates on capital gains and dividends, the highest income earners would report less income from capital gains and dividends and hold more tax-exempt bonds. Such tax policies would reduce the share of reported income of the top earners almost as effectively as the recession the policies would likely provoke. The top 1% would then pay a much smaller portion of federal income taxes, just as they did in 1979. And the other 99% would pay more. As the CBO found, “the federal income tax was notably more progressive in 2007 than in 1979.”
We need to cut government spending. Until we get spending under control (back to below 20 percent of the GDP as it was before President Obama took office), we will never be able to raise taxes enough to pay the cost of government. Even if we confiscated all the money and property from everyone who made more than $100,000 a year, we would still not pay off our debt or be able to stop borrowing one out of every four dollars we spend. It’s the spending, stupid.